What is DeepSeek – and why is it shaking the AI world?

The successes of the AI startup DeepSeek are sending shockwaves through the industry. What makes the Chinese model R1 so unique?

DeepSeek's Disruptive Debut
DeepSeek, a mere year-old AI startup, has stunned Silicon Valley with its groundbreaking AI model that rivals the world's leading chatbots while operating at a fraction of the cost. Based in Hangzhou, China, the company challenges the assumption that AI's future requires ever-growing amounts of energy and expensive resources for development.

What is DeepSeek?
Founded in 2023 by Liang Wenfeng, the head of the quantum hedge fund High-Flyer, DeepSeek specializes in open-source AI models. Its mobile app soared to the top of iPhone download charts across the U.S. shortly after launching in early January.

Unlike traditional chatbots like OpenAI’s ChatGPT, DeepSeek’s app explains its reasoning step-by-step before delivering an answer. The company claims its R1 model matches the performance of OpenAI's latest versions and has licensed its technology for developers to build their own chatbots.

What Makes DeepSeek R1 Stand Out?
DeepSeek’s R1 model boasts efficiency that dramatically reduces training and development costs compared to its U.S. competitors like OpenAI or Meta AI. This raises questions about the necessity of significant capital investments in cutting-edge hardware, such as Nvidia’s AI accelerators, for achieving state-of-the-art AI performance.

The model has outperformed or matched competitors in leading benchmarks, including AIME 2024 for mathematical reasoning and MMLU for general knowledge. On UC Berkeley’s Chatbot Arena leaderboard, DeepSeek is among the top contenders.

A Worrying Development for the U.S.
Despite U.S. export bans on advanced GPUs to China aimed at slowing the country’s AI advancements, DeepSeek's achievements suggest Chinese engineers are making breakthroughs with limited resources. Although it’s unclear how much access DeepSeek has to cutting-edge hardware, the startup’s efficiency-focused approach demonstrates that these trade restrictions may not be entirely effective.

Global Recognition
Since its first model launch in 2023, DeepSeek has drawn worldwide attention. In November, the company unveiled its R1 model, designed to mimic human-like reasoning. Its chatbot app gained rapid popularity in January as a cost-effective alternative to OpenAI, with investors calling it a "Sputnik moment for AI." By January 25, the app had 1.6 million downloads, ranking #1 in app stores across the U.S., U.K., Australia, and more.

Who is DeepSeek’s Founder?
Liang Wenfeng, born in Guangdong in 1985, holds a Master’s degree in Electronics and Information Engineering from Zhejiang University. DeepSeek was founded with just ¥10 million ($1.4 million). Liang emphasizes China’s need to develop its domestic AI ecosystem and reduce reliance on U.S. technology, stating, “More funding doesn’t necessarily lead to more innovation.”

DeepSeek’s Impact on the Global AI Market
The success of DeepSeek may force companies like OpenAI to lower prices, disrupting the high-cost investments of competitors like Meta and Microsoft. Developers worldwide are experimenting with DeepSeek’s technology to create new tools, raising concerns about the need for proper safety measures in AI use.

Challenges for DeepSeek
Like other Chinese AI models, DeepSeek censors sensitive topics, such as questions about the Tiananmen Square or Taiwan. The bot also refuses to provide detailed answers about President Xi Jinping but responds freely to questions about other global leaders.

Additionally, DeepSeek's cloud infrastructure faced a significant outage on January 27, likely due to its sudden popularity. As user demand continues to surge, the company must scale its systems to handle increased traffic.

DeepSeek’s rise demonstrates how innovation and resourcefulness can disrupt an industry dominated by a few major players. However, its trajectory also raises critical questions about global AI regulations, market dynamics, and the geopolitical implications of technological advancement.